- Despite an overwhelming percentage of executives who consider diversity to be more important to their organizations now than it was three years ago, the number of women and “ethnically diverse” CEOs among the Fortune 100 companies remains low, at roughly 1 in 4, according to the Route to the Top 2022 report from senior-level talent and advisory firm Heidrick & Struggles.
- The annual report, released Nov. 17, found that gender, ethnic and racial diversity among these CEOs grew a mere 2% since last year, from 22% in 2021 to 24% in 2022. “This is especially ironic,” given that 93% of executives surveyed for a Heidrick & Struggles report released in September viewed diversity, equity and inclusion as a business initiative that has increased in importance since 2020, the firm said in a media statement.
- The stagnant level of diversity among Fortune 100 CEOs contrasts sharply with the rise of diversity among board members in Fortune 500 companies, Heidrick & Struggles noted. “It’s clear there is much work to be done as boards outline their paths for CEO succession,” Bonnie Gwin, vice chairman of Heidrick’s global CEO & Board of Directors Practice, said. Based on the findings, boards will benefit by helping to equip women and “diverse leaders” step into CEO roles, she added.
Business leaders are paying attention to why DEI, especially in top management, is critical to their organization’s success, reports consistently show. For example, execs who responded to Heidrick & Struggles’ September survey touted the benefits of improved employee engagement and corporate reputation due to increased emphasis on DEI initiatives, HR Dive has reported.
Also, new findings from shareholder advocacy nonprofit As You Sow and investment services consulting firm Whistle Stop Capital show that management diversity leads to better financial performance. The findings revealed that those with a greater representation of Black, Indigenous and people of color employees in management had higher cash flow and net profit and lower volatility.
Yet, the transition to a diverse community of CEOs among Fortune 100 companies remains sluggish. The Return to the Top report showed that the number of women who hold the top position in 2022 — 12% — hasn’t changed from 2021 (10% are White, 2% are Black). There’s slightly more diversity among the ethnic makeup of CEOs: 6% are Asian or Asian American; 3% are Black or African American; 4% are Hispanic or Latino; and 1% are Middle Eastern, according to the report.
One reason may have to do with turnover: There is a lack of it among CEOs but a lot among chief diversity officers. The CEO tenure was slightly longer in 2022 at 6.8 years, up from 6.6 years in 2021, the Return to the Top report found. By comparison, there’s a high turnover rate among CDOs — the leaders who oversee a company’s commitment to DEI initiatives, William Cooper, a DE&I advisor for Sentinel Benefits & Financial Group, pointed out in a recent op-ed to HR Dive.
Cooper argued that the CDO turnover is due to preventable factors, such as a lack of resources and lack of accessibility to company execs. “If CEOs are not committed to changing their behavior or attitude, employees won’t feel it necessary to adjust theirs either,” Cooper wrote. “Additionally, when leaders are distant from DEI initiatives or do not prioritize them, the CDO is often deprived of essential resources ... such as access to the company’s legal resources or demographic data,” he said.